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Saturday, March 25, 2017

We are in the middle of a bit of a stramash in New Zealand regarding bottled water. Some folks are all a twitter (jealous?) of companies which are bottling this natural resource and selling it overseas. I sort of see where the nay-sayers are coming from. Bottling water is a license to print money. What the complainers want to do is to put a price per liter on the water these companies use but this is the thin edge of the wedge. If you charge these folks, why not other users such as industries and agriculture for their water use. This would be a complete can of worms for an agricultural export country such as New Zealand.

Just to put things in perspective, New Zealand is not a desert. We have some dryish places like the East Coast of South Island where I live but even here we have above 500mm per year. The West coast of South Island, is quite literally a temperate rain forest.

So let's first look at how much water various industries use. For bottled water each bottled liter uses 1.39liters of water, for soda, 2.02, for beer 4, for wine 4.74 and for hard liquor, 34.55 liters. Note that this is only for the processing. It doesn't include, for instance, the water needed to grow grapes or hops or the water to produce the bottles . The table below gives some of the agricultural figures.

Typical values for the volume of water required to produce common foodstuffs

Source: IME Note that these figures are only for the production of the product, not for the processing.

Let's look at our primary, number one industry in New Zealand, the production of milk. The over-all world estimate is just over 1000 liters of water to make a liter of milk The whole calculation is fought with whichevers and whatevers. Do you go as far as calculating the water needed to produce the oil that powers the tractor, or the water needed to produce the plastic or glass that the milk is packaged in and so forth. The 1000liter figure is just for the farm that produces the milk. However far you decide to go in the chain, it is a lot of water.

New Zealand produces about 21.3billion liters of milk per year. Using the above figure, she therefore uses about 21.3 trillion liters of water. That is 21,300,000,000,000 liters of water. If the bottled water industry produced the same amount of bottled water as the milk industry produces milk, she would use 1.39/1000 = 0.00139 as much water or 29.6 billion liters of water. To put this into perspective one of our modest rivers, the Clarence, on the East coast (dry side of South Island) sends 50.5billion liters of water per year to the sea. A little over half of this modest sized river would be enough to allow the sale of a volume of water equal to the volume of milk produced in New Zealand.

Note that the dairy industry at present uses the equivalent of 421 Clarences to produce its milk ie, 842 times as much water as would be needed to produce the same volume of bottled water.

Incidentally, we actually sent 9m liters of water overseas last year so the bottled water industries actually used 0.00025 of a Clarence (one Clarence equals 50b liters). Lots of room for expansion before the amount of water taken for bottling becomes a significant drain on our wet little country.

Surly this water bottling has to be a more efficient use of our water than producing milk. I'm not suggesting that we stop producing milk but surly in a country like New Zealand, we could locate, say at somewhere on the West Coast, a water bottling plant and bottle vast amounts of the best water in the world without even noticing that some had been removed. West coast rivers are vastly larger than east coast rivers.

But as usual we are missing the important question.

The important question is who owns our water bottling industries. It is my understanding that at present, overseas companies bottle our water. Surly in a technologically modern country such as New Zealand were we can totally own and run a massive dairy industry with all the technological challenges associated with such a perishable product, we can manage, run andfinance our own water bottling operation. We also finance, produce and market our own wine. Surly we can market water. How about if our pension funds finance the industry. As I said, water bottling is a license to print money. If our National pension funds owned the industry, in essence, water bottling would be owned by the people of New Zealand and contribute to our pensions which are under some pressure at present. We could completely shelve this current idea to raise the pension age if we really went after the bottled water market.

It is obvious that any foreign company worth the exorbitant salaries of it's executives, and which has a license to sell one of our renewable products will do their best to make her profit overseas* and will take the profit they earn in New Zealand overseas as well. We allow this with our foreign banks which were reported last year to be taking one Billion dollars a month overseas. Are we a little simple in the head, or do we lack confidence or are we just plain lazy. Are we going to allow big multi nationals to make money from our water.

* The common dodge is to sell the water (or other resource) at a very low price to a subsidiary overseas. The overseas subsidiary then ups the price and makes most of the profit in that country.
No, we must own our own water bottling industry and tax it as we would tax any other export business, no more and no less. Absolutely no need to put a price on water. The government could sweeten the deal by giving a percent of the tax from the industry to the local district where the water is extracted. The revenue must stay in New Zealand and the taxes go to the exchequer. With a hugely profitable business such as this, the contribution to the exchequer would be huge.

Just a couple of days ago one of our economists on National radio was commenting on how much more valuable a dollar is when it is earned and spent in New Zealand than when it is earned and sent overseas. Hardly rocket science.

It might take some time to penetrate overseas markets if we went it alone but we did it with milk and we did it with wine. Surly we can do it with water. Are we just being lazy, inviting foreign companies to do what we should be doing.

Always follow the money. Who is benefiting from us having foreign companies bottle our water. Who owns shares in these companies. For that matter, who is benefiting from having foreign companies fish our waters, build our rail stock, buy our raw logs instead of finished wood products and so forth. You fill in the gaps. There are many other examples.

Apropos, the head line in today's Press (Sat 25 March, 2017) is Can China save New Briton*. Are we becoming some Micky Mouse third world country that can't look after her own affairs for the benefit of her people.